This sum comes in compensation for the cancellation by Canberra, in 2021, of a mega contract relating to the purchase of twelve French submarines for a value of 56 billion euros.
Compensation of 555 million euros will be paid by Australia to the industrialist Naval Group to put a financial end to the affair of the French submarines, Australian Prime Minister Anthony Albanese announced on Saturday June 11.
The French group accepted “a just and fair settlement” of 555 million euros (584 million dollars), said the new head of government, for the breach of the gigantic contract of 56 billion euros, which had caused a diplomatic crisis between Paris and Canberra last fall. In September 2021, then Australian Prime Minister Scott Morrison suddenly terminated the French contract that had been in the works for years. The head of government announced that his country would buy American or British nuclear-powered submarines, a major change for a country with weak nuclear capabilities.
Scott Morrison then drew the wrath of French President Emmanuel Macron, who accused him of deception. Relations between the two countries remained icy until the election last May of centre-left Anthony Albanese.
The submarine contract is the centerpiece of Australia’s defense strategy against China’s growing influence in the region under Xi Jinping’s presidency. Nuclear-powered submarines could allow Australia to operate more stealthily and deterrently from China. But there is great uncertainty about when Australia will actually be able to own these devices. The first American or British submarine is unlikely to be in service for decades, leaving a void for Australia with its aging fleet.